Insurance (Amendment) Bill 2011 [Seanad]: Second Stage (Resumed)

Question again proposed: "That the Bill be now read a Second Time."

I welcome the opportunity to speak on this important and urgent Bill, the Insurance (Amendment) Bill. The comments of Deputy Michael McGrath, the Fianna Fáil spokesman, when he was addressing this issue were ironic. He used his time to criticise the speed with which this Bill is being passed. As the Taoiseach mentioned this morning, he failed to comment on the urgency for the 1,600 people waiting to hear if their jobs can be secured by the passing of this Bill. If Deputy Micheál Martin were Taoiseach now, we could expect that by now he would have requested an expert group to do a report on what happened in Quinn Insurance.

There was a relationship between the practices of the last Government and the events that have brought us to the point where hundreds of millions of euro must be found to bail out the Quinn group. The previous Government encouraged property speculation, giving rise to the main causes of our current position as a Government working with determination to root out all that is bad in Irish society. The other partner in this sorry affair is Anglo Irish Bank. A company that provided insurance moved so far from its core business that it managed to lose €700 million in property speculation. That raises questions for the insurance industry, whereby we must look at how any business dealing with taxpayers' money can move so far from its core business to speculation. The previous Government encouraged every business and businessman, no matter if he was in insurance, shop-keeping or the bar and restaurant trade, to move into property speculation. That mix gave rise to the current sorry state of the country.

I was dismayed listening to Deputy McGrath that he could not focus on the positives of this Bill, that there are joint administrators who worked hard to secure a deal that will keep people in employment. He misunderstands completely the appetite within the country for the Government to move decisively to deliver the changes we need so much. There is no expectation that the Government will always make the correct call but the Government would be accused of negligence if we did not provide the High Court with the assurances needed to protect these jobs. Deputy Micheál Martin consistently sought reports and then failed to act upon them. Such governance must be a thing of the past and I commend the Minister for once again introducing legislation in a quick and efficient manner.

I mentioned the practices of insurance companies. We must find a way in future to look at the regulation of the insurance industry. When Cork flooded a number of years ago, groups, including charities, were not able to take cases for the total event to the Ombudsman. At the time insurance companies, particularly the Quinn Insurance group, did not accept their responsibilities to the people of Cork. We must find a way not only to prevent insurance companies from moving from their core business, but also from operating in ways that neglect their customers.

I commend the Bill to the House and commend the Minister on the urgency with which it has been introduced.

I welcome the opportunity to speak on this Bill and thank the Minister for introducing it. It deals with vital changes to current legislation for the insurance industry, bringing much needed clarity, as well as bringing Irish legislation into line with EU legislation.

Reference was made to the urgency with which the Bill was brought to the House. The need for the legislation is unquestioned, both to comply with EU law, as well as the obvious need to facilitate the imminent sale of Quinn Insurance to Liberty Mutual Direct Insurance Company Limited. There are 1,600 jobs at stake and in the current times, those employees must priority.

I welcome the clarity the amendments in the Bill bring to the risks covered by legislation and the scope of the cover provided by the insurance compensation fund. I am glad the Minister has chosen to exempt health insurance from the proposed 2% levy. I know of many people who are struggling to maintain their health insurance policies and many of them have opted not to renew their policies. An extra 2% on those policies would have the unwanted result of many more policies being cancelled. It is most unfortunate, however, that the insurance compensation fund does not have adequate resources to meet the liabilities incurred, primarily by Quinn Insurance. The necessity to introduce this 2% levy on non-life insurance policies is saddening. Once again, the many are paying for the mistakes of the few.

Greed and lack of regulation combined to bring us to this situation. What is most galling is that lessons do not appear to have been learnt from previous mistakes in this sector. It is almost 30 years since the collapse of the Private Motorists Protection Association, PMPA, which was brought about by providing cheap insurance without sufficient funding to back up claims. No sooner had the taxpayer begun to adjust to bearing the financial brunt of that collapse than Insurance Corporation of Ireland, ICI, also ran into severe difficulties and its owner, Allied Irish Bank, had to be bailed out, so to speak, by the Government of the day. There are alarming echoes of the past in what the Government is faced with today. The introduction of this 2% levy is exactly what happened after the collapse of PMPA.

Quinn Insurance managed to combine the previous mistakes by providing too cheap insurance without sufficient funds to cover claims while also overextending itself in the UK market, leaving the burden of covering its losses with its clients and the clients of other insurance providers. It is incredible that the Quinn Insurance website, right up the day of this debate, claims as a positive attribute that it is the company that has driven down the cost of insurance in Ireland and gained a reputation for value, customer service and innovation. The company may have driven down the cost of insurance on its entry to the marketplace in 1996, but at what cost? The concept of customer service espoused by Quinn Insurance has now, unfortunately, extended its reach to all non-life insurance policyholders right the country, with the imposition of this 2% levy.

Once again, we find ourselves reliving history. The real question is, shall we learn from it. To that end, I welcome the Minister's efforts in addressing the need to strengthen regulation of the insurance sector and I am pleased to note that the Central Bank has doubled its staff resources in this area to more than 100. I also look forward to the strengthening of regulation on an international level, especially the forthcoming EU Solvency II Directive.

I welcome the Bill and the clarity it brings and I commend it to the House.

I am pleased to speak on the Insurance (Amendment) Bill 2011. Notwithstanding the importance of the Bill, I echo previous comments regarding the guillotining of the debate on Second and Report Stages. Amendments must be submitted before the debate on Second Stage has even commenced. This does not give Members the opportunity to hear the Minister's response on Second Stage. We must complete the passage of the Bill tonight. This is not a good way to pass legislation. The Minister may think it is but no one else does. He may wish to make a case as to why the guillotine is important but no one will believe him. It is important that what we are doing here has some level of political credibility.

I take a slightly longer term view of this legislation. My simple comment is, "Here we so again". I remember the debacles of the PMPA and of the ICI and AIB. The insurance compensation fund was introduced to deal with the liquidation of an insurance company called Equitable Life. The problem of insurance companies making bad investment decisions, underpricing their policies or running a bad business is not new. We had to introduce legislation in the 1960s to deal with it. We did the same thing with PMPA but we learned no lessons.

People who were involved in AIB at the time of the ICI debacle have much to answer for regarding where we are today. I am not playing party politics but we know who was Taoiseach at the time of the ICI-AIB debacle. We set the seeds then for the lack of regulation of the banking sector. Much of ICI's business was outside Ireland. AIB came to the Government and said it would go under, with a systemic impact on the financial situation of the State, if a levy was not introduced. The Government folded like a pack of cards. I accept that the problem had to be dealt with, but not a single person in AIB paid a cost for it. No one lost his job, was disciplined or sidestepped. No board member resigned. The Oireachtas told the biggest bank in the country that no matter what mistakes it made the national Parliament would bail it out and, above all, there would be no repercussions for the bank for any action taken in future years.

That led to an arrogance in the financial institutions which ultimately led to the arrogance we saw in Anglo Irish Bank, which is why we are here today. Had that generation of senior bankers known that if they got things wrong they would suffer and would not automatically be bailed out with a blank cheque from the Exchequer, we would not be here today. They would not have taken the chances they did.

Bad commercial decisions were made at that time, but we are now in a worse situation. We are here today to bail out the gambling debts of Seán Quinn and we are asking the people of Ireland to do that. If we saw this in a James Bond film we would not be able to fathom what was happening. There is a big insurance company and a big bank, Anglo Irish Bank. Seánie FitzPatrick, of Anglo Irish Bank, is a gambler by definition, because he gambled the future of the bank on bad financial and property decisions. One of his big customers, Sean Quinn, is another gambler and he gambled on his insurance company. He used some of the reserves of that company, which were needed to pay claims, to help buy shares in the bank which he was trying to take over. It is as if a gambler in a casino wants to take over the house, and the house, which is Anglo Irish Bank, advances the gambler some loans so he can take over the house. The whole thing collapsed because money was going around in circles and there was no substance to back up the original transactions.

Anglo Irish Bank collapsed and Quinn Insurance has collapsed as a result. The Quinn empire has been severely damaged and the Irish people are being brought in once again to bail it out. One may speak about the Irish public, the Irish taxpayers or the Irish insured public. They are all one and the same. The levy covers motor insurance, which all car owners are legally obliged to have. Anyone who has motor insurance in Ireland will be obliged to pay the levy. They will have no choice. Every person who has a car will contribute towards paying these gambling debts. This is what many people find obscene.

The problems in Anglo Irish Bank have existed for a period of time. However, we now know more about Anglo than we did two years ago. If the facts as we know them now had been known two years ago we might have taken a different course of action.

I have sympathy for the staff of Quinn Insurance, but no member of the Government parties, if jobs were threatened in his or her constituency, would ever ask the Irish public to stump up €500,000 per person to keep those jobs. This bailout will cost the Irish public €720 million to save the 1,500 jobs in Quinn Insurance. We want to keep the insurance market alive, maintain competition and protect as many jobs as possible, but this Bill is not only about protecting jobs. Protecting jobs is only one aspect of the overall situation and it is being used to bludgeon this Bill through the House. We are being told that if we do not accept the guillotining of the debate we will cause people to lose jobs. No Government Deputy would ask for €500,000 per job to be invested in any project in order to keep jobs alive. The Government should not overplay this argument because people will see it is not the full picture.

If there is a shortfall in Quinn Insurance in the future, the joint venture company of Liberty Mutual Direct Insurance in the United States will not be caught for any of those liabilities, because they will be capped. While this might be a good deal, there is no basis to assume it is so. I cannot say whether this deal in respect of the joint venture, which was struck on behalf of Irish taxpayers who own Anglo Irish Bank which is running Quinn Insurance, is a good deal because the financial transactions have not been made known to us. While it might be a good deal, I have no reason to believe it is. It is because of this lack of information that Fianna Fáil has a problem with this legislation.

Also, there is no sunset clause in respect of when the fund will come to an end. Prior to the summer recess, the Government introduced a pension levy of 2.5% on pension funds. This week we are being asked to support the introduction of a 2% insurance levy. What levy might the Government introduce next week, next month or next year? Every other month a new levy is being introduced. There has been much talk of competitiveness in the Irish economy. Those two measures fly in the face of that. The Government says it does not want to touch income tax rates in the forthcoming budget. Based on its performance to date, it will probably, while continuing to state it will not be touching tax, introduce further levies. The Government has been consistent in this respect, namely, it has raided pensions in order to get €2 billion and is introducing, by way of this legislation, an insurance levy to meet the cost of the insurance compensation fund.

We do not know at this stage if the €700 million will be sufficient. Will we be back here in five years amending this legislation to increase the levy from 2% to 3% because the amount required was underestimated and is €900 or will the Irish taxpayer be left to pick up the balance? None of this has been made clear in the legislation. Essentially, this is a stealth tax to deal with this issue. Time should be provided for a full Committee Stage debate on the details of the joint venture with Liberty Mutual Direct Insurance Company.

As it stands, this legislation has had to be amended because it is not in compliance with EU legislation. The Bill proposes to amend the Insurance Act 1989 which covers the risks of policyholders of Irish authorised companies to one which covers all insured risk in the State, except for specific risks. Many insurance companies in Ireland are only branch operations. What is covered and not covered in this legislation will lead to legal challenges. Section 3(c) provides that access to this fund is confined to firms that conduct a large percentage of their overall business in Ireland, namely, 70% averaged over the three years before the appointment of the administrator. I would like the list of companies covered by this to be made available to us today. When we brought in the bank guarantee scheme, we knew which banks were participating. I want to know the names of the companies that will be eligible to receive funding from the insurance compensation fund if a need arises. That list needs to be made available to us. Also, we need an explanation in regard to why the figure of 70% was chosen. Was it chosen to suit one or two particular companies?

While I understand the urgency of passing this legislation, Fianna Fáil has major problems with it as presented today.

I wish to share time with Deputy Seán Kyne.

Is that agreed? Agreed.

I welcome the opportunity to contribute to the debate on the Insurance (Amendment) Bill 2011. In essence, this Bill must be introduced to finance the insurance compensation fund. We are all aware of the reason for the establishment of the fund, namely, Quinn Insurance is under administration and is in the process of being sold as a going concern. Sufficient reserves will have to be in place to meet future liabilities arising from this situation.

Quinn Insurance suffered losses of €905 million in 2009 from its operations in the UK market which it entered as a so-called loss leader trying to create market share for itself. One could argue that was a spectacular gamble. A further €160 million loss is envisaged for 2010. These are colossal amounts. It is likely that the amount required from the insurance compensation fund will be a massive €738 million. Currently, there is €40 million in this fund, which shows how off the scale is the situation. What we could do with €750 million today if we had it.

The Government is again tidying up the mess of reckless trading. It was once said that we relied on the kindness of strangers. These days we are relying on the kindness of the taxpayer. To fund this requirement, a 2% levy is being applied to all insurance policies. This will be monitored by the Central Bank which will determine the levy to be applied and funding required, which may vary over time. The fund, which will facilitate payment to policyholders in respect of risks held within the State, comes with certain limitations such as payment from the fund shall not exceed 65% or €825,000, whichever is the lesser. Under the new scheme, policyholders will be covered in respect of risks within the State. There are four main determining factors in this regard, namely, whether the buildings are located in the State, whether the vehicles are insured within the State, whether the short term insurance was taken out in the State and whether the habitual residence of the policyholder is within the State. It is important all these are clarified, given the level of wriggling there has been in this area previously. In my opinion, all legislation now needs to be bolted down.

The levy will not apply to health insurance, which is to be welcomed. People in all parts of the country are, because of their financial situations, dropping out of private health insurance. Currently, wealthy people have no private health insurance and many people in receipt of social benefits have medical cards, which is the reverse of the position a few years ago. We will need to address this issue in the future. People who are contributing to the State by way of taxes deserve to be treated fairly. I believe companies should be obliged to confirm that 70% or more of their business over a three year period has been in Ireland, as provided for in the legislation. This will assure policyholders that they will be underwritten in the event of liquidation. This obligation to declare is important given the use in the past of financial vehicles to disguise cleverly the location of moneys. I do not want us to arrive at a situation whereby companies will say that 70% of their business is in the State when clearly it is not. We need to monitor this.

We cannot be complacent. We cannot assume that once this legislation has been enacted everything will be okay. We must remain suspicious and not assume that these situations will never recur. History has taught us to the contrary. The Criminal Justice Bill 2011, which deals with white collar crime, will be helpful in this regard because following its enactment people who robbed this country of vast sums of money may be sent to prison. There is no doubt but that this is a distressed sale. The moneys we get will not match what we could get in a healthier situation. However, we must deal with the reality in terms of where we are. I welcome this legislation and hope it proves to be a good deal for the taxpayer in the long term.

It is important to note that the Insurance (Amendment) Bill 2011 is required to extend the scope of the insurance compensation fund to cover all insured risk in the State. It is also important to note that the request for the additional funds has come from the Central Bank. As other speakers stated, this is hugely important if we are to protect more than 1,600 jobs at a time when job retention is as vital as job creation.

The ability of the State to raise finance has been seriously compromised by the previous Government's stewardship of the economy and the bailout arrangements with the EU-IMF-ECB.

The 2% levy to be placed on policies will ensure adequate funding for the insurance compensation fund and must be viewed as a solidarity move. It will protect all insurance policyholders should their insurance company become unable to fulfil its duties and responsibilities because of insolvency. Failure to deal with this issue could have far-reaching consequences that would negatively affect insurance customers in other companies and significantly affect the taxpayer. In this respect, the insurance compensation fund can be viewed as an insurance on insurance, protecting what might, but hopefully will not, happen in the insurance market. I welcome the important stipulation that availability of the insurance compensation fund will be restricted to those companies which conduct at least 70% of their business in the Irish market. Hopefully, this will focus minds in insurance companies that may be reviewing their operations in this country.

The provisions of limits on what may be drawn down in the fund regarding individual policies is also crucial. This will provide a measure of equity so that as many policyholders as possible will be protected and set a standard should payments have to be made in the event of the collapse of an insurance company.

My colleague, Deputy Dara Murphy, referred to insurance issues regarding flooding in Cork in 2009. County Galway was also affected by floods in 2009, the fallout from which is still evident as some people in the county having problems getting insurance. The 2009 flooding left Galway city virtually isolated with access only through one road while Claregalway town was cut off. Since then, the Office of Public Works has done great work with local authorities in providing remediation works. The Minister of State, Deputy Brian Hayes, visited Galway to see the works earlier this year. Much State money has been spent on small and large flood relief schemes. In Claregalway, the bridge has been widened with a proposal for a new bridge.

Some householders affected by the floods have had to build new homes but cannot get insurance for them. There is a distinction between those who have not applied for insurance and those who have applied but were refused. Some homes have had their insurance policies renewed but this depended very much on their insurance provider. One individual who contacted me was refused insurance by his current provider and has been unable to get insurance from other providers because his house was previously flooded. He cannot even get insurance to protect against the possibility of a burst water pipe. He built his new home 20 feet higher than his original home which means flooding by natural disaster is unlikely.

Will such cases be dealt with some form of an insurance credit fund? We must examine a process in which a portion of the insurance fund is used in cases in which a person could not get insurance. The trauma experienced by those affected by the Galway floods is now exacerbated by the concern they cannot get insurance for their new homes. I know the Minister of State, Deputy Brian Hayes, had discussions with the Irish Insurance Federation about this matter. I hope he will follow my suggestion to examine the possibility of introducing a scheme for the small number of people affected by this.

The Insurance (Amendment) Bill 2011 proposes to amend the Insurance Act 1964 to change the scope of the insurance compensation fund from one which covers the risks of policyholders of Irish authorised insurance companies to one which covers all insured risk in the State, except for specified excluded risks. So states the opening sentence in the Department of Finance's explanatory memorandum that accompanies the Bill. Nowhere in the explanatory memorandum, however, is there any reference to what this Bill is actually designed to serve and neither is there any explanation for the Government's insistence in pressing this legislation through both Houses of the Oireachtas on or before 29 September 2011.

The haste employed in pressing all Stages through the Seanad in a single day, the day following the Bill's publication, speaks volumes on this Government's total disregard for proper scrutiny, careful consideration and debate on important legislation that has significant consequences for all non-life, non-health policy-holding citizens and much more besides. While a little more time has been made available for Dáil Members to prepare for yesterday's and today's Second Stage, all remaining Stages will be guillotined by 7.30 p.m., yet this legislation provides for among other matters the imposition of a 2% levy on all insurance products with the exception of life and health policies. This is expected to realise €68 million per annum and will continue indefinitely, irrespective of any suggestion that it might be time-limited.

This is without question yet another tax and one unrelated to any notion of one's means or ability to pay. The Revenue Commissioners will collect the levy on behalf of the insurance compensation fund. So what is it all about? It is wholly and solely allied to the sale of Quinn Insurance Ltd, QIL, to the giant US insurance company, Liberty Mutual Direct, a deal set for ratification in the High Court on 4 October. The joint administrators of QIL, Michael McAteer and Paul McCann, require a Government transfer of some €280 million from the insurance compensation fund to seal the deal. The money involved will, of course, be recouped, not from the insurance industry, but from the pockets of every other non-life and non-health insurance policyholder in this State, irrespective of with which insurance company they do their business.

It is important to recall some of the background to this Bill. On Tuesday, 30 March 2010, the High Court appointed two joint provisional administrations to QIL, acting on the application of the newly-appointed Financial Regulator, Matthew Elderfield. Mr. Elderfield took up his appointment on 19 October 2009, less than six months prior to moving so aggressively against arguably the most successful, certainly the most competitive, player in the insurance market here and then a growing thorn in the side of the long-established players in the British market. From day one, my concern was first and foremost for the jobs of the some 2,800 employees in Quinn Insurance, for their dependent families and the economy of the Cavan-Fermanagh-Border region. Mr. Elderfield had also placed a bar on Quinn writing new business north of the Border and in Britain.

With fellow elected representatives of all parties, I met Mr. Elderfield at the Central Bank building on the following Tuesday, 6 April, at which we sought a lifting of the ban to protect 1,500 jobs directly impacted by his ban decision. A joint all-party appeal to Mr. Elderfield on 29 April was co-signed by myself with the now Taoiseach, Deputy Enda Kenny, the now Tánaiste and Minister for Foreign Affairs and Trade, Deputy Gilmore, and other Ministers, including Deputies Noonan, Bruton and Howlin. It sought the early restoration of the maximum access possible for QIL to the North of Ireland and British markets. Following this and intense lobbying, the next day Matthew Elderfield responded advising that he had decided to amend his direction and that private motor insurance business, both new and renewals, could again be written by Quinn in the Six Counties and Britain.

It was too late and not enough, however. That same day, Friday, 30 April, brought the news from the joint administrators that some 900 jobs were to go at different Quinn Insurance sites, with Cavan, Enniskillen, Navan and Blanchardstown to be most acutely hit. As convenor of the all-party cross-Border elected representatives group, I accompanied colleagues of all politics, North and South, to a series of meetings in the weeks following. The exchanges and questioning continued throughout all of 2010 as my files confirm. In the early course of its work, the group cited four agreed pillars of concern. These were the retention of all jobs and where they were already located and the future of the Border economy; the need to secure the €2.8 billion due to Anglo Irish Bank, the taxpayer, by Seán Quinn; the need to maintain the competitiveness brought by the Quinn Insurance model to the market; and the need to protect all Quinn policyholders.

In January 2011, we embarked on a renewed offensive securing meetings with the Financial Regulator, the Governor of the Central Bank, the administrators, the chief executive and chairman of Anglo Irish Bank and the chief executive of the National Treasury Management Agency. It was apparent to all of us on the group when attending the first of these meetings with the administrator, Michael McAteer, that proposals prepared by the Quinn representatives, which for a considerable time had been jointly worked on by Quinn representatives and a representative of Anglo Irish Bank, were not going to be given any consideration whatsoever, deadlines or no deadlines. The absolute rejection of our appeal for a serious evaluation of the then styled Quinn proposals beggared belief. Why would an administrator, someone entrusted with the task of overseeing the business and ensuring its continuation as a going concern and with the responsibility to consider all possible resolutions of the understood difficulties in the business, including its sale, so adamantly refuse to give any consideration whatsoever to proposals emanating from the senior management in the company, the very people who knew the business best?

We got our answer when we met the Financial Regulator, Mr. Matthew Elderfield, on Tuesday, 25 January of this year, a meeting also attended by the Governor of the Central Bank, Professor Patrick Honohan. In response to a direct question from an elected Member of these Houses, Senator Wilson, Mr. Elderfield stated that he had made it abundantly clear to the administrators and to all stakeholders that there was to be no consideration given to any proposal whatsoever that involved Seán Quinn, his family or any of his senior management team. Contrary to normal procedure, the administrators did not have a free hand.

This blatant admission shocked all in attendance and left us in no doubt that all was not as it should be. It now transpires that a tape may exist whereon administrator Mr. Michael McAteer is recorded as saying, and I quote from a typed purported transcript sent to my Cavan office:

Let me be ... categoric: The Quinn family are gone. They will never have an involvement whatsoever in this insurance company ever, ever again. Now I've been saying it for months ... I know they've been at various games in the background to try and manipulate things. That is the facts of the matter. We can't put that in an email. I can't put it in writing but that's what's going on.

This is a further shocking insight into the thinking and disposition of those placed at the helm of this major employer and player in the financial services sector and of those who sought their appointment.

Let there be no mistake about it. Our appeal has always been for fair and full consideration of the Quinn proposals, not to favour it. We believed from the thorough presentations we had received that it was a viable formula to address all the agreed pillars of concern we had adopted and were pursuing. We were not of course privy to the detail of any other proposal, so we could not make comparisons, but that was clearly not unique to us. It also applied to the administrators, who were given a clear instruction from the Financial Regulator, that is, no consideration for any Quinn-connected proposals. We have never been voices for Seán Quinn. If the Quinn proposals, properly assessed and properly evaluated, were shown to be deficient and not fit for purpose, then so be it. How much time have I remaining?

Fifty seconds.

It is my belief that the full facts in respect of what went on prior to and since the appointment of the administrators need to be fully investigated. I call on the Government to place the Insurance (Amendment) Bill 2011 on hold for a limited period to allow for a full, independent inquiry — one with statutory powers to compel all potential witnesses to present — to report within three or four months. Once the full truth is established, let the Government decide on whether the course provided for in this legislation is the way to go. I am not convinced that it is.

I will highlight some of the questions that need answering. Why did the joint administrators maintain for over six months that there would be no call on the insurance compensation fund but have now made a call of almost €700 million? Why have the joint administrators set the average reserve in Quinn Insurance Limited, QIL, outstanding claims at almost three times the market average?

The Deputy's time has concluded.

Why was the Quinn proposal not properly assessed and compared with what is being proposed in the Bill in the interest of taxpayers and insurance consumers? Did the Financial Regulator influence the selection of proposals received by the court appointed joint administrators and did he seek to stymie the Quinn proposal from the outset? I have many more questions, but these need to be answered in the interest of full truth and to allow for a proper evaluation of the best way forward. I am only asking for a short setting aside and putting on hold of this legislation to ensure——

The Deputy is taking from other speakers' time.

——the very best decisions are taken in respect of this company, its employees, the taxpayer and the policyholders.

I welcome the opportunity to address the Dáil on the Insurance (Amendment) Bill 2011, which was published in early September. Owing to changes in EU law on the non-life insurance sector since the fund was last used, it was necessary for the Minister to seek legal advice on current legislation. On 4 October, a deal will be done between Liberty Mutual Direct and Anglo Irish Bank. The Bill will assist the deal in going through and will secure the 1,600 jobs at stake in the Quinn Group.

I am a part of this ongoing saga. On Good Friday of last year, we were called to a meeting on the future of the Quinn Group. At the time, I represented Roscommon-South Leitrim, which included Ballinamore and Carrigallen. Seán Quinn's role in the area was important. According to one person, the area was only good for snipe grass. However, Seán Quinn set up a quarry many years ago and took on the vested interests in the cement and glass cartels and the insurance industry. He created jobs in an area that otherwise would never have had them. He gave young people an opportunity to up-skill so that they would not need to go to Belfast, Dublin, London or New York, as was usual at the time. They could work, be involved and have futures in their localities. Irrespective of whether we like him, Seán Quinn gave people the opportunity to regenerate their localities.

Seán Quinn made many enemies in the insurance and financial industries because he proved that he could outdo the old establishment, be it in the City of London, Frankfurt or Dublin. He was not a popular person within those industries. He had a team of young people who excelled in delivering a service. A young person could not get insurance many years ago. I was a named driver on my father's licence for 25 years because insurance would have cost me £1,700 or £1,800. Seán Quinn took on the established groups.

Deputy Ó Caoláin correctly stated that the group attending our meetings was cross-Border, cross-party and cross-community. We agreed that the retention of jobs was paramount at all times, that the €2.8 billion Seán Quinn owed to Anglo Irish Bank would be repaid to the Irish taxpayer, that the company would retain competitiveness in the insurance industry and that existing policyholders would be protected. We met the administrators and the staff, who were fearful for their jobs. We also met the management team, Seán Quinn, the Financial Regulator, the Minister for Finance and the National Treasury Management Agency, NTMA. Everyone seemed to have a different story.

I pay tribute to Deputy Ó Caoláin for convening our group. He was forensic and fair in managing the group's work and he included people from all sides. He played a major role in seeking answers, given the wide gulf. To this day, they have not been answered. Whenever we attended meetings with Seán Quinn and his management team, they had opinions on what was the right model.

When we met officials from Anglo Irish Bank and other institutions, such as the Financial Regulator, we were presented with a completely conflicting view. To this day, we have still not got to the bottom of it. The current Financial Regulator has done a very good job. I told him when I met him it was a pity he was not in place six or seven years theretofore when the regulation was of such a light touch. We were told then the way forward was international finance and we lost sight of real economic activity, including agriculture and the creative industries. Our economic activity involved selling houses to one another. The then Government and Financial Regulator believed this was right. Perhaps we all thought we would have an easy ride but we ended up where we are.

Seán Quinn made the mistake of trying to own his own bank. He was duped by the chairman of Anglo Irish Bank, Mr. Seán FitzPatrick. He wanted to take on the banking industry and made a huge mistake. The country is paying for it and many of his employees have been left in a very vulnerable position. Having said that, however, Seán Quinn made a huge difference at the time in question to an area that would not otherwise have had a fair crack of the whip.

I am delighted Liberty Mutual has decided to buy the Quinn group. In the past six months, many of the staff have been quite pleased they have a future under an international insurance company. However, there is resistance from unnamed elements, who have caused a certain amount of trouble by cutting communication lines. There is no place in this society for those kinds of actions. The cross-Border, cross-party group has stated very strongly that the way forward is working with all the stakeholders to ensure the jobs are retained.

The insurance compensation fund only contains €40 million. Whatever we give to the fund will be repaid to the Exchequer. This has happened before. A levy was introduced in 1984 following the collapse of PMPA in October 1983.

The Minister has decided to exclude health insurance from the scope of the scheme. The main player in the market, the VHI, is not authorised by the Central Bank. Huge difficulties face people in private insurance schemes and many are going without private insurance because they simply cannot afford it. The costs have increased. There are far too many cosy cartels and far too many consultants getting paid four times more than those in other areas. The Minister for Health is examining this. There is far too much waste.

Many young couples do not have the money to insure their own houses. Many businesses do not have the money to insure themselves. The only reason they are being insured is because the banks are putting on pressure in this regard. Houses and businesses are being insured not because it is right to do so but because the banks want to ensure they have a hold on them if something happens to them. This is a considerable problem. The Minister should set up a team to investigate it.

I would like to believe politicians on both sides of the Border will try, on a cross-party basis, to deal with this very difficult problem, not by throwing political missiles at one another but by working together to ensure 1,600 jobs are retained. I thank the Minister for his interventions, which I hope will secure the jobs.

Once again ordinary citizens are being forced to pay for the gambling debts of the super-rich through a new form of tax. That is exactly what this is and what the public sees it as.

There is no better example of the greed of the very wealthy in Ireland than that of Seán Quinn, who is already the richest man in the country. He embarked on a crazy gamble involving billions of euro. If anyone put at risk the 1,600 jobs in Quinn Insurance, it was he and his family, through being prepared to gamble so avariciously in the banking area.

It will be very interesting to see what emerges from the Garda investigation into Anglo Irish Bank when the results thereof eventually see the light of day. It should raise serious questions about the relationship between Mr. Quinn, the Quinn group and the ancien régime in Anglo Irish Bank, and also serious questions about insider trading and illegal activity.

The Quinn group owed €2.8 billion to Anglo Irish Bank and €1.2 billion to other creditors. This is the result of the casino-capitalism antics of Mr. Quinn and many others involved therein over recent years. The Quinn family has the nerve to go to the courts next week to challenge its loss of control of the Quinn group. Between 2008 and January 2010, when control of the group was lost, €61 million in goods and services was approved by directors and paid to companies controlled by the Quinn family. This was on top of €200 million in capital contributions, whatever that means, from the Quinn group to the family companies in 2008.

No doubt Seán Quinn and his family regard the €740 million bailout as of no great consequence. It is regarded as loose change, or couch money, when one has blown €4 billion in the bookies of Anglo Irish Bank. However, it is a real imposition on the hard-pressed policyholders and the public, who face austerity measures day in, day out, with a consequent impact on their pay packets.

With regard to the very serious question as to how open-ended the bailout will be, the value has risen from €600 million to €738 million over the past two months. The only good point that can be made, if any, about this disgraceful and murky affair is that 1,600 jobs have been saved, at least for the time being. We know how vulnerable they are when we hear about the job losses in TalkTalk and other companies.

Quinn Insurance is part of a profitable and successful section of business and remains so. The problem is the disastrous way that the Quinn group was managed by the Quinn family. Surely it would have been more in the interest of the jobs at Quinn Insurance and the protection of the policyholders for the State to take over the company rather than hand it over for a song to an American multinational, Liberty Mutual Direct Insurance.

Seán Quinn and the Quinn family are responsible for almost 10% of the cost to citizens accruing from the bailout of Anglo Irish Bank. Instead of going to the courts next week to challenge their loss of control of the Quinn group, they should be coming up from the cells to the dock to account for their actions and the financial imposition on the people of the State.

Deputy Feighan referred to the mistakes that were made. They were not mistakes but calculable, clear, clinical and cynical moves by developers, bankers and large businessmen like Seán Quinn to make massive profits at the expense of ordinary people. They believed they would get away with it time and again. It did not work on this occasion; those responsible were found out and the banks collapsed. It is no accident that citizens are being asked to pay time and again. I refer to the bin worker, post office worker, Guinness worker, social welfare recipient, the elderly and those who can ill-afford to pay up time and again for the ills of the corrupt wealthy in this country. It is about time the Government and the Parliament state we will no longer accept this from big business. TalkTalk was able to announce it would wind up in a short period of time but we are not prepared to introduce company law legislation to oblige companies to give at least three months notice of any closure. Such measures would give time for intervention. The Parliament should be considering areas such as these to protect our citizens.

I will finish on this point although I have not used my full allocation of ten minutes. I was not expecting the other parties in the Dáil, who made such a fuss about the guillotine, to fail to use their full time. I will give time to other Deputies.

I am grateful for the opportunity to speak on this very important amendment. I commend the Minister for Finance and the Minister for Justice and Equality and their Departments on their sterling work in bringing the Bill before the Houses of the Oireachtas at such short notice. Having listened to Deputy Joan Collins one must wonder whether she lives in the real world.

She should take the example of private enterprise. Private enterprise is a very tough place to be. The job of people such as Seán Quinn, who start in business and make huge strides throughout their lives, having come from a small farm as he did, is very difficult. Seán Quinn is not the only such person in Ireland. I have no doubt Seán Quinn got trapped in a rat race to get to the top in his business during the time of the Celtic tiger. When one examines what happened to him, particularly with regard to banking and Anglo Irish Bank, who is to blame for it all? I state fairly and squarely it is the regulators who were put in charge of banking business over the years. We come to the House and blame small and big business and people who take risks, but we never have a go at or a chat with the civil servants who are paid huge salaries to look after these businesses.

A man who put a company and people's lives at risk.

I would like Deputy Collins to listen and bear with me for a minute or two. The most regulated business in the country, and the most successful during this era when the country is going badly, is agriculture. For the past ten years regulators at the Department of Agriculture, Fisheries and Food watched over everyone involved in the industry and now we have the most transparent business in the country. We can boast about agricultural production and tell the world how successful it is because the regulators and those in charge watched farmers and watched the animals from birth until slaughter and everything was able to be traced. Agricultural regulators looked after their industry but financial regulators did not.

Deputy Collins and her people who come to the House week in and week out are anti-private enterprise. It is high time for them to blame the real people at fault, and these are the regulators. The world and its mother outside the House knows this and it is high time we dealt with it and were honest with ourselves, rather than taking a populist stance and going for the people experiencing difficulties. I ask Deputy Collins to look at this in future.

Of course we would have liked more time to discuss and scrutinise the Bill. Much dismay has been expressed at the speed with which this amending legislation is being progressed, but I remind my colleagues we are doing this for the sake of the country and for the betterment of people in the industry. A total of 1,600 jobs are at risk if we do not facilitate the sale of Quinn Insurance on 4 October. The interest expressed by Liberty Mutual is conditional on funds being available to cover the losses on the Quinn Insurance books. None of us is comfortable with having to cover these losses, but we would be far more uncomfortable contemplating the loss of 1,600 jobs.

The second point to be made is that at present the Insurance Act 1964 is in contravention of an EU directive. Article 46 of the third non-life insurance directive precludes a member state from applying an indirect tax on insurance risks outside its jurisdiction. Without these changes, no levy, regardless of size or reason, could be placed on insurance policies in the State. Over the summer months, there was a great deal of confusion about this matter and I thank the Department of Justice and Equality for clarifying the issue. What we must decide today is whether we let 1,600 hardworking and loyal employees take the hit for Quinn's mistakes, or whether we as a country shoulder the burden together. Neither choice is perfect, but only one is right.

Of course, I share concerns about the current cost of insurance in this country. These costs are often prohibitive for my constituents. On several occasions, I have spoken in the House about the cost of insurance for young people and in these difficult times, we should be seeking ways to reduce these costs. Transition year in schools is an ideal opportunity for learner drivers. Those completing such a course during transition year would be in a better position to drive a car when they come of age. I urge the insurance companies to allow at some stage a reduction in charges for people who have completed a transition year driving course. The insurance companies and the Department of Education and Skills should be encouraged to do this.

Businesses, particularly small businesses, are under enormous pressure due to the cost of insurance. Yesterday, I dealt with a constituent who has a small business who was not able to afford to pay fire or public liability insurance because it would mean not taking money home to feed the family. If at all possible, the cost of insurance should be reduced.

Health insurance policies have been excluded from this legislation, partly due to the increased number of people failing to renew their cover. This is another practical problem faced by many households. The bills received, particularly by those with two, three or four school going children, are astronomical and it is very difficult for them to pay these bills on an annual or monthly basis. At all times, we should encourage people to pay their VHI bill or bills from other health insurance providers and make it possible for them to do so. I appeal to the Government to consider, if at all possible, including tax deductions to make it possible and feasible for people to pay their VHI or other health insurance bills.

Given that the levy is expected to raise approximately €65 million per year, a period of ten years should be enough to cover what I see as a conservative estimate of €720 million. The Minister has not put a time limit on this levy given the volatile nature of such estimates, but I would like to hear a commitment from him or the Department that the levy is solely associated with the Quinn Insurance issue, and that my constituents will not see this levy as a permanent fixture in their insurance premiums.

Many of my constituents have raised this issue with me and are sceptical about the levy being a temporary addition to the insurance industry. A commitment such as the one I mentioned would go a long way towards easing their concerns. It is my understanding that a reduction to a 1% levy may be possible if claims were to be front loaded. Such a possibility must be considered by the Minister in an effort to reduce the burden placed on many households.

It is disgraceful that this important piece of legislation is being rammed through in two days. Frankly, it makes a joke of the Government's pre-election talk of transparent government, renewing democracy and all the other hyperbole we had prior to the election. The legislation has far-reaching consequences for probably hundreds of thousands of policyholders for many years to come. It will have damaging and far-reaching effects on our already crippled economy.

On the substantial legislation and what is being proposed, the Taoiseach today in responding to concerns about the legislation and the speed with which it was being pushed through suggested that what was motivating it was a desire to protect the 1,600 jobs in the Quinn Group. From the point of view of the United Left Alliance, and I suspect the majority of those who are critical of the Bill, we are just as concerned to maintain the jobs in the Quinn Group as anybody else is, or at least the jobs of ordinary workers and their families who depend on them. The issue is not about who is most concerned for the jobs and families of ordinary people, it should go without saying — from our point of view it does go without saying — that we are as committed as the Government is to protecting those jobs.

The question is whether what is being done is the best way to do it from the point of view of the cost to the public and the effect on the wider economy. I attended a briefing in the Department of Finance yesterday and have been trying to follow the labyrinthine twists and turns of the Quinn debacle in recent years. Frankly, one's head would be fried by the complexity of this whole business. Perhaps part of the purpose of the legislation is to obscure something behind veils of complexity, which is in reality just another shafting of the members of the public and policyholders who end up picking up the tab. My summary of what this is about is that it is yet another mechanism to ensure that ordinary people pick up the tab for the sharp practice, probably criminal practice, of corporate tycoons such as Mr. Quinn, the people running Anglo Irish Bank and the political system that allowed it to happen. In the face of the rampant greed of those people, yet again the ordinary citizen is being asked to pick up the tab. That is what the legislation is really about.

The bottom line of this rather complex piece of work is that for the next ten years, or possibly longer, ordinary policyholders will have to pay higher insurance. It is money they cannot afford when they are already being hit with higher ESB prices and gas prices, levies such as the universal social charge and the impact of unemployment for the hundreds of thousands who have lost their jobs, and the impact of welfare cuts. People are already being hit by those costs and on top of that they are going to be hit with higher insurance costs.

The small and medium enterprises the Government says it is so committed to assisting will be further hit, damaged and crippled by higher insurance costs which they simply cannot bear. The other costs they have to shoulder at the moment are already driving hundreds and thousands of businesses out of business and the proposed legislation is likely to do further damage in that regard. All of that is being done to cover the losses of Mr. Quinn. I am not an expert in the legal and financial side of these matters but with my relatively untutored eye it looks as if what he did was criminal. There is no other way to describe it. The assets of Quinn Insurance, which were supposed to cover claims by policyholders were being used to essentially cover other loans, speculative loans such as casino gambling on property, other deals and of course on the Anglo Irish Bank debacle. Ordinary people are being asked to pick up the tab for that.

Meanwhile, we have a situation where all the burden is being shouldered by ordinary citizens and the economy but we are going to get nothing out of it. As if that is not bad enough, we cover Mr. Quinn's losses, nurse the potentially profitable bits of the company back to health and then we give them away to a multinational. It is absolutely extraordinary. Liberty Mutual would not be interested in the profitable bits of Quinn Insurance, primarily operating in this State, if it did not believe a lot of money could be made. If one takes out the gambling and sharp practice of Mr. Quinn and the mismanagement, malpractice and gambling that led to the losses there is underneath it all, at least in this country, a fundamentally viable business. That seems crazy in the extreme. If we are going to cover the losses, give €200 million to Anglo Irish Bank bondholders then at the very least we should own something at the end of the process. If, for the cost we are bearing, the public owned Quinn Insurance it would guarantee the jobs or would give us a far better chance of guaranteeing the 1,600 jobs. In that situation we could also have some control over insurance premia so that they do not do further damage to the economy and we could potentially generate revenue for the State.

Instead what we are doing is covering Mr. Quinn's losses, protecting the bondholders in Anglo Irish Bank, unbelievably giving them €200 million, and an important fact for the public to digest, paying consultants enormous amounts of money to manage the heist against the people. One of the consultants currently at the Quinn Group to advise presumably on this sort of deal is Mr. McKillop, who is being paid €915 an hour, €7,000 a day. If it is a five day week, that is €35,000 a week, adding up to nearly €2 million a year. Who is paying for that? We are. The policyholders and public are paying for it. It is unbelievable. It is like a honey pot for those over-paid consultants. Members of the Quinn family are still in situ. There is no provision in the Bill to go after the €200 million given to Mr. Quinn’s family or to go after the other means by which the family is trying to syphon off its personal wealth.

It is unbelievable that in 2008, before the whole collapse took place, Mr. Quinn — who may have been in the know about what was going to happen — could give €200 million to his four children to increase their personal wealth portfolio. These euphemisms are about taking vast amounts of money from us to give to his children and protect and insulate himself against what was coming further down the line to make them obscenely wealthy. Where is the Government's will to introduce emergency legislation? I would be happy if the Government rammed through such legislation designed to go after the Quinn family's wealth and other assets, instead of making ordinary people pay for the greed of Mr. Quinn, while also protecting bondholders in Anglo Irish Bank. It is shameful.

I wish to share time with Deputy Broughan.

I welcome the opportunity to contribute to the debate today and commend the Minister and the Department on the swift action taken to deal with this matter by updating the 1964 legislation. I acknowledge that the addition of any levy is not welcome but there are times when, simply put, needs must. In this instance, the existing fund of €30 million will not fill the requirement by the Quinn Insurance group of between €600 million and €700 million.

The Irish Insurance Federation has welcomed the clarity provided by this legislation because there was a lot uncertainty about the proposals to be brought forward. The request by the federation to remove the 3% stamp duty on non-life insurance products will require proposals to raise the associated revenue of €109 million elsewhere in order to fulfil our obligations under our arrangement with the EU and IMF which, whether we like it or not, continue to fund this country. In these times there are not many willing sectors volunteering additional sacrifices likely to raise this €109 million shortfall.

From any reasonable assessment, the sale of Quinn Insurance to Anglo Liberty Mutual would appear as the best possible outcome for the Quinn group, with the protection of jobs and any call on the insurance compensation fund kept to a best case scenario. Like so many other successful businesses at one time, previous management at the Quinn group gambled on property-related investments and have now left the group with these reckless losses.

The opposition to this Bill is both understandable and popular. However, it is necessary for us to move on from opportunistic opposition to a necessary imposition on the taxpayer to protect the company, its 1,500 jobs and the policyholders. If this company were to be left to go to the wall, as some in this House have suggested——

The only logical extension to some of the arguments that have been presented here is to let the company go to the wall, which has been suggested.

There have also been references here to what I can only describe as classic back-of-the-envelope sums. A Fianna Fáil speaker referred to this development as investing €500,000 per job in the company but that is completely missing the point. The consequences of letting it go to the wall would be catastrophic and far-reaching. The State has obligations above and beyond the obvious comprehension of many of the Opposition contributors to this debate thus far. This responsibility extends beyond the safe-guarding of the company and its workforce. There are serious implications for the overall economy, Ireland's corporate reputation at home and abroad, and the knock-on effect on consumer and investor confidence. There is also the issue of protecting policyholders' security. All these factors must be taken into account when assessing the overall picture. It is of course much too attractive to have a few cheap shots at the Government and indulge in opportunistic populist rhetoric than to take the time to assess the wider picture, which is a luxury only afforded to opposition parties.

The most serious aspect of this debate is the necessity to learn from the dreadful mistakes that have led the State to this situation. There is ample evidence of poor regulatory practices in the series of events that led to the current difficulties in the Quinn group. One could go so far as to say that the regulatory practices were non-existent. I urge this house to work collectively on behalf of the Irish people, who deserve more than cheap populist rhetoric, to ensure an adequate regulatory system for the future in order to avoid this cycle repeating itself.

This Bill is another tragic element of the wreckage from the Irish banking disaster. At the outset, it should be acknowledged that Seán Quinn and the Quinn group did make a significant contribution to this country's economic life. In the group's direct insurance division, for example, there were around 1,700 people employed in Cavan, Blanchardstown, Enniskillen and the United Kingdom.

The Quinn group reportedly employed over 6,000 people across all its divisions with this employment being concentrated in counties Fermanagh and Cavan. The establishment of the insurance division's headquarters in Cavan provided a major fillip for the local economy and much needed employment in what was a terrible employment black-spot. In Cavan and Fermanagh, the Quinn group is the type of employer where a whole family could be employed at the company, given the dearth of other employment opportunities in the area. The extraordinary history of this group of companies began in Seán Quinn's native Derrylin in County Fermanagh.

There has been a grotesque, rip-off culture within the Irish insurance market. The Acting Chairperson, Deputy Olivia Mitchell, will remember that we used to discuss that issue 15 or 20 years ago. Nonetheless, it was ignored and thus permitted and abetted by successive Governments. The competitive advantage that Quinn Insurance seemed to achieve since it entered the market in 1996 was often compared by the worshipping media to the achievements of Ryanair, as a strong domestic insurance provider, as they saw it.

However, as with our major failed banks and the totally failed regulatory system — which was spearheaded by the Fianna Fáil and Green Party politicians who led Governments over the past 13 years — questions were being raised from 2007 onwards, about the Quinn group's level of reserves, particularly in the UK. Comparisons were drawn around that time between the group's modus operandi and the operations of the failed Australian insurer HIH. These are matters which I hope the Committee on Finance, Public Expenditure and Reform — of which I am a member — will thoroughly investigate and hold all those responsible to account in the coming years.

The unfolding of the Quinn Group saga since 2007 and the toxic interaction of the company with Anglo Irish Bank has produced a devastating effect on the company's employees and on the national economy, in addition to terrible new insurance costs for every Irish family. This Bill is a shocking result of the situation that the Quinn Insurance division currently finds itself in due to the appalling gambling with CFDs on Anglo Irish Bank shares by Seán Quinn and his group, as well as by his Bazzely family company.

Every household in Ireland is now being made to pay for that disgraceful and illegal behaviour. Householders are rightly appalled by the imposition of a 2% levy on all non-life and non-health insurance policyholders because of the inexcusably reckless behaviour involving crazy billion euro gambles on Anglo Irish Bank shares. It is now having a knock-on effect for insurance consumers, and will have an increasing effect in the years ahead.

It is an extraordinary scandal that throughout recent decades the public has been levied again and again to support disastrous insurance company failures, as with banking, while at the same time enduring high insurance premiums and dreadfully poor competition. As I understand it, the Government has to advance approximately €280 million of our money in the fourth quarter of this year to cover Quinn group liabilities before the levy kicks in. The insurance compensation fund currently stands at only €40 million, which is hopelessly inadequate compared to the amount required to keep this company in existence.

We are familiar with such levies because of what occurred when the PMPA became insolvent in the mid-1980s. That was another disgraceful episode in our economic history. That levy lasted until 1991. I welcome section 7 of the Bill which lays out provisions on contributions to the fund through insurance providers and includes a regular review of the levy. Such a review is extremely important as this levy should be as temporary as possible. I urge the Government to ensure that this is the case.

Major changes to the insurers in administration under this legislation will also ensure that the ICF will only apply to risks in the Irish State and only if 70% of the insurer's business in the previous three years related to risks in the Irish State.

The Quinn family's gambling on Anglo shares to the tune of €3 billion has to be one of the most disastrous punts in Irish corporate history. Their use of contracts for difference, CHDs, to buy shares and the toxic relationship between the Quinn family purchase of Anglo Irish Bank shares and the bolstering of Anglo share prices eventually blew up catastrophically when the casino bank unravelled with devastating losses for the Quinn group, for its workers and for all of us.

The story of the Quinn group and Anglo Irish Bank is another tale of arrogance, hubris and perhaps criminal corporate behaviour that has become all too familiar to the Irish people in recent years and this Bill is the necessary result. The debris and wreckage of this financial crisis has included important companies such as Quinn Insurance and AIB. The Irish people have been forced to purchase such companies with their hard-earned money and I would advocate that we hold onto them.

I worry about this Bill while understanding why the Government feels the need to introduce it because its back is to the wall. I agree with much of what was said by Deputy Broughan and Deputy Boyd Barrett. This is not the first time such a situation has occurred. I worry about the compensation culture which compensates businesses which run into trouble and are bailed out by the Government because they are so big. It seems that over a period of nearly 30 years, we have learned nothing about regulating our financial industry, our banks and other industries which have grown very large.

Deputy Broughan mentioned the PMPA. Just prior to the PMPA collapse, in the case of another insurance company, Insurance Corporation of Ireland, one man went a bit berserk and started selling extremely risky products, mostly overseas. Not only did he nearly bring down Insurance Corporation of Ireland, he nearly brought down AIB. It was similar to the recent situation in various financial crises. An overnight decision was made and three members of the then coalition Government — former Ministers John Bruton and Alan Dukes and former Taoiseach Garret FitzGerald — decided they would have to rescue Insurance Corporation of Ireland and also AIB.

The result of this decision was that the Government guaranteed the future of AIB and in the process, no jobs were lost in AIB. One person in Insurance Corporation of Ireland did not retain his job but the rest of the banking and insurance systems carried on as if nothing had happened. A levy was imposed upon the poor unfortunate taxpayers and this was bad enough. Some people who were insiders made a lot of money by buying shares in AIB and this is well documented. Once they were guaranteed, they made a lot of money out of it. It was a shameful episode.

The PMPA followed about two years later. This was a massive insurance company which dealt mostly in motor insurance. It had been built up in a completely unregulated manner. The dogs in the street knew that the person in charge, Mr. Joe Moore, was very well connected with Mr. Charles J. Haughey and it was believed that he was protected and encouraged by people in Fianna Fáil and as a result of some political connivance, the company was not properly regulated. The PMPA went bust for an enormous amount of money and we are still paying for that many years later. There followed the saga of Larry Goodman, who was very powerful. The State provided him with export credit insurance. It was a slightly different type of product but again he was allowed to continue to trade recklessly with implicit Government guarantees and he eventually went under.

As in all these other cases, special legislation was required. If I remember correctly, the Dáil and Seanad were recalled from the summer recess in order to deal with the Larry Goodman case and to allow for the Goodman group to be put under the protection of examinership. The most recent examples are Anglo Irish Bank, which was not allowed to fail, and now the situation with Quinn Insurance, another insurance debacle. How in the name of God did all these things happen within the past 30 years as they are all very similar? Nobody seems to have learned the lessons of the banking boom, particularly the lack of regulation in the insurance industry, which should have been the first lesson.

There is a kind of pattern to these events. In nearly all cases, these industries or companies are one-man bands. The PMPA was basically dominated by Joe Moore and the Moore family. The Goodman group was obviously dominated by one man. The Anglo Irish Bank collapse was certainly dominated by one man. The Quinn group and Quinn Insurance was dominated by one man. Are these not danger signals? Banks and insurance companies which are dominated by a family are, presumably, not properly regulated for reasons which are now completely incomprehensible but this has been a pattern.

The first action that should have been taken in respect of Quinn Insurance was for the Financial Regulator to ask questions about one of the biggest companies in the insurance market. There had been rumours and reputational difficulties. I do not suggest that regulators should act on rumours but they should take rumours into account. There were stories about Seán Quinn and about Joe Moore and doubts about Seán FitzPatrick and all sorts of other people who dominated these companies and businesses. Yet they were allowed to carry on by the Government and by the regulator.

There was a bad feel about these companies and bad reports had circulated about them. Everyone relied on the regulator to do the job but it has not done it. It is easy for me to say this as a member of the Opposition and it is post factum. However, I wonder if we have learned any lessons because the response of successive Governments for the past 30 years has always been to introduce legislation such as this Bill in order to prop up a company which is in very big trouble.

I happen to agree with Deputy Boyd Barrett. The answer in these cases is undoubtedly to nationalise such companies. I recommend they should be nationalised on a temporary basis while Deputy Boyd Barrett would recommend a permanent nationalisation. In these cases, they are obviously in unfit hands and therefore should be nationalised temporarily. One cannot leave banks and insurance companies in this situation in the same hands. Neither can they remain in the hands of a management layer which has been there during all these crises.

I do not know the extent of this particular problem but we know that policyholders will have to pay the price for many years to come. We do not know the extent of the black hole. I do not applaud part of the solution, which is to sell it off to Anglo Irish Bank. I have read articles in the Financial Times and foreign newspapers and have talked to people looking at what is happening and they have said they do not believe this. They do not believe that a bankrupt bank with holes all over it is being encouraged by the Government to buy a bankrupt insurance company in the hope it will go all right. I do not know why the company was not put up for sale and sold in total to a foreign company. God bless us, but we would be lucky if we could get anybody to take it off our hands.

I hope the Minister does not respond by saying we will leave it to the regulator, but what is the Government's vision in this regard and what measures does it have in mind to ensure that this type of activity does not happen again? It sticks out a mile that we must regulate this area properly and in a way which stops Sean Quinn and other reckless people like him from taking over one of the biggest companies in the State and running it as a personal fiefdom. Otherwise this will happen again and again. It is not good enough just to introduce sticking plaster and say, "Off we go". This will cost policyholders significant money for many years to come until the next crisis.

Insurance is a particular industry and we know from contract law that a contract of insurance is a contract of uberimmae fidae, the utmost good faith. That is the core of the insurance service provided to customers and we must have people who are undoubted in character and who will not be tempted by the cash up-front from premiums without knowing how to reserve for the risks of the policies that they write. How come a person who built up a huge cement empire could be deemed to be experienced and competent to run an insurance company, one that is not a monoline, but a multiline insurance business? The thought is absurd. The ground has been covered by previous Deputies with regard to the reasons this legislation is being introduced. Essentially, it is being introduced to cover €1 billion of losses, €900 million that is recognised to date and a further €100 million or a little more to be reported in the year just ended.

Regulation, supervision and inspection did not occur. People who read the business sections of weekend newspapers will remember that just over a year ago, Tom Lyons of The Sunday Times wrote a very good forensic article on Quinn Insurance. He trawled over the ground of the fine that had been meted out by the regulator to the company. What happened was that just as PricewaterhouseCoopers came to the end of its audit for the accounts for the year ending 2008, it decided to inquire about the €400 million described as “balances on deposit”, expecting to be furnished with certificates of bank balances for that amount. Instead, it was given the explanation that it was a loan repayable by Quinn Holdings Limited for cash reserves that had been “borrowed” by that company for its own purposes — nothing to do with insurance.

Therefore, we had the biggest borrowing — or may it be called "theft"? — of cash reserves of a non-life insurance company by, as previously described, the sovereign owners. I do not mean "sovereign" in the sense of Irish Republic, but in terms of what would be the "ducal" owners of this insurance group.

I urge the Deputy to have a little caution when making specific reference to people outside of the House.

These are matters of fact. I have no fear whatsoever.

I am very careful always to deal in fact. I hate opinions. My opinions are weak, but the facts are strong and speak for themselves.

The auditors then referred the problem because they could not sign off on the accounts. A director of the company, who had been a senior public servant, and who was perhaps on the board for decorative purposes and to add brand strength to the group, resigned when the problem emerged. The problem was said to be resolved when it was referred to the regulator, who suggested the €400 million could be repaid from Quinn Holdings in nine equal monthly instalments — like hire purchase or just a small petty cash amount. The fine imposed was a mere €3 million, the largest fine in Irish corporate history. This was just 0.75% — a laugh considering the enormity of what took place. When that resolution was put into place, all was quiet and the former public servant director of the group reappeared on the board. The article on this by Tom Lyons was in The Sunday Times and nobody has challenged it because it is fact.

What date did it appear?

About a year ago. The finance area provides a great temptation to misbehave for people without character. It is also an area where boards can fall asleep on the job and it is the area where regulators fell asleep. What we need now is clear and transparent supervision and inspection. We need a visible system, like that in hotels or restaurants where a sheet of paper goes up on the wall of the bathrooms covering every hour of the day and the person inspecting signs his or her initials on the sheet guaranteeing the bathroom has been inspected and is working properly. We need the equivalent system in our financial institutions. This is not something complex, but does require character.

The legislation before us provides an operational and technical passage for shoring up this loss and trying to fund it. It is appalling that a 2% levy is being applied to provide €65 million a year for ten years. This is just as appalling as previous cases mentioned, such as the PMPA and the Insurance Corporation of Ireland.

It behoves us as a Parliament to insist that the operational areas that look after banks, insurance companies and anything to do with finance are properly regulated. Not only must the rules and procedures be set out, they must be inspected, supervised and evidenced, with nobody being put under any embarrassment to do their work. It is with a sad and heavy heart that I commend this Bill be passed. I commend it in order that 1,600 jobs are protected and because there is an operational base to running an insurance company. It is shocking that a busted bank has to form a partnership with Liberty Mutual to maintain this business. There is perhaps merit in considering whether it might have been best to nationalise all the financial institutions temporarily in order that we could draw back the curtains to get a full and fresh view and an injection of new people transparently.

It is tragic that somebody even dared to think to make an application for salary levels in AIB to be in excess of €500,000. That is breathtaking and absurd.

Imagine if we had a plague and qualified Irish-born consultants were working abroad and they said they could only return if they were paid €500,000 to deal with the disease. It would reflect poorly on them as people.

I have raised a few thoughts because they will decide how we act in future as a country. We are clearing up an almighty mess and it leaves a very bad taste.

I compliment my colleague, Deputy Mathews, on his thought provoking remarks. It is refreshing that a Member will discuss issues in a non-partisan manner.

The Bill results yet again from the mismanagement of the financial sector, the mismanagement of our economy and the mismanagement of one insurance company. The cost of gambling, games of high stakes poker and financial recklessness has been landed on the doorstep of every citizen regardless of culpability. The Minister, who has been responsible, brave and courageous in his stewardship of the Department of Finance, is acting responsibly again with this legislation. It is likely that the Insurance Compensation Fund will need €738 million to cover the losses incurred. The Minister outlined in the Seanad that he anticipates that the levy will bring in €65 million per year. This means we will all pay for the mismanagement of Quinn Insurance for 12 years, which is regrettable. Deputy Mathews is correct that the relevant boards and the regulator fell asleep and the Minister is correct that there was lax regulation. For more than a decade we will pay for lax regulation, personal financial gambles and ignoring reserve requirements.

Since administrators have taken over the running of Quinn Insurance, they have uncovered losses of €905 million in 2009 and €160 million in 2010. Stringent reserve requirements are being enforced by the Financial Regulator to prevent such losses recurring. It takes time, a new approach, money and leadership from the Minister to right the mistakes of a decade of mismanagement. His proposals, however unpalatable, are a prudent and measured step in tackling the problems presented by Quinn Insurance. He has outlined to both Houses how he has tried to minimise the impact of the levy, how he has taken into consideration increases in the cost of health insurance, which I very much welcome, and how he is attempting to secure the employment of 1,600 people at Quinn Insurance. The Taoiseach yesterday and today referred to the deadline of 4 October.

Senator Ross referred to the issue of family domination but the reality is our regulatory system went absent, aided and abetted by then Government. The Members opposite who wanted to extend the debate cannot even be present for it. Where are they? There is no Opposition Member in the House. Where is the new approach to Irish politics? It is not evident in this Chamber.

Hear, hear. Well said.

How dare they demean Government Members who are interested in protecting and preserving jobs and who want a new approach to politics, which the Minister and the Government have adopted.

Prior to implementing this legislation the Minister will take precautions to ensure that the cost to policyholders is limited as far as possible. The review undertaken by the State Claims Agency to review processes at Quinn Insurance has shown that the administrators have made positive changes. It is important that we have a debate about the future viability of the insurance industry. I am not an expert but there are issues regarding insurance that need to examined. It is easy to only think of insurance companies as mercenaries focused solely on profit but we must also remember the important role that they have in facilitating our daily lives, for example, driving cars, going to the shops, buying houses and attending concerts and football matches. Without a viable insurance industry, all these activities would be curtailed or would cease. Insurers have an important social function which must be facilitated.

The flood in Cork city in 2009 caused havoc, destroying homes and businesses. However, it provided an example of the importance of insurance companies. If it was not for insurance cover, people would not have been able to return to their homes and businesses would not have reopened. While insurance companies have a social role, they also have social responsibilities. They have a responsibility to promptly pay out on valid claims and not to frustrate the innocent victims of misfortune. They also have a responsibility to provide insurance cover at a reasonable cost in order that people can drive to work or buy a house. Too often these responsibilities are ignored.

Recently I have come across a number of cases of people having difficulty obtaining house insurance in Bishopstown and Glasheen in Cork city. I was provided with a list of six insurers that refused to quote by one person. House sales in Cork have fallen through because of the inability of purchasers to secure insurance. Ostensibly, the reason given is subsidence issues but even where underpinning has been carried out, the insurers are still refusing to quote. The refusal by a number of insurers to provide cover for houses in Bishopstown is preventing young families moving into the area. Recent census figures show that the population in mature and established parts of Cork city has fallen by more than 20%. For years young people could not afford to buy in the city but now the reluctance of insurance companies to provide cover is preventing them from moving into the area. I hope that can be addressed.

We cannot have a situation where insurance companies refuse to cover homes in a large part of the country's second largest city. When the State takes actions to secure the viability of the insurance industry, the very least we can expect is an industry which understands its function in society and which facilitates people to buy a home. Sadly, that is not happening and that needs to be addressed.

In the 1960s the State had to rescue Equitable; in 1983, ICI; in 1985, PMPA; and this year, Quinn Insurance. We have a history of the difficulties of insurance companies becoming a burden on policyholders for many years. I welcome that the Minister has attempted to limit liability in this instance but I hope that the Department of Finance and the Financial Regulator have learned hard lessons from this debacle. We must have a regulatory regime that does not permit personal financial gambles to have such dire consequence for our entire country.

It is important to recognise that the legislation affects 1,600 jobs. These jobs are held by ordinary men and women, as the Taoiseach said earlier, who are not on high powered salaries and who are trying to stay in employment. There are concerns about the role the insurance industry plays in society and there is a need for a review. I hope the Government will proactively engage with the insurance industry in this regard.

Debate adjourned.
Sitting suspended at 1.30 p.m. and resumed at 2.30 p.m.